AP Explains: GOP tax package nearly law; what happens now?

MARCY GORDON

AP Business Writer

WASHINGTON (AP) — Cue the accountants — and the IRS rule-writers — the massive Republican tax package is nearly a done deal, soon to become law.

After weeks of drafting, fierce lobbying, horse-trading and cliffhangers from some holdout GOP senators, all that’s left is the voting and President Donald Trump’s signature. This week Republicans in the House and Senate will whisk through the sweeping $1.5 trillion GOP legislation on party-line votes.

The legislation permanently slashes the tax rate for corporations from 35 percent to 21 percent and reduces levies on the wealthiest Americans, while making more modest tax reductions for most others. The tax cuts for individuals are temporary, expiring in 2026. It doubles the standard deduction used by most Americans, to $24,000 for married couples, also ending in eight years.

The new law kicks in Jan. 1. It will bring the biggest overhaul of the U.S. tax code in three decades, giving Trump and the Republicans their first major legislative achievement and political insurance, as they see it, to hold on to their majorities in next year’s elections.

A look at how this unfolds:

WHEN ARE THEY VOTING?

Now that concerns of holdout Republican senators such as Marco Rubio of Florida and Susan Collins of Maine have been met, Senate approval of the package is buttoned up. The Republicans’ razor-thin margin in the 52-48 Senate left them only two votes to spare, setting off last-minute negotiations behind closed doors. Now, even with Sen. John McCain, R-Ariz., recuperating from cancer treatment in Arizona, the Republicans still can muster a simple majority of the 99 senators present.

Republican leaders have set the vote in the House first, expected this afternoon, followed by technical termination of the joint House-Senate conference committee that blended the separate bills into a compromise. That means when the Senate votes — likely this evening — Democrats will be unable to force a series of votes on a so-called “motion to recommit” the bill to the conference committee. The committee won’t exist, so no delay.

No Senate Democrats are expected to vote for the legislation. Thirteen House Republicans voted against the House bill last month, all but one from high-tax California, New York and New Jersey in protest of reduced state and local tax deductions.

A WHITE HOUSE CELEBRATION

After final passage, the legislation goes to an eagerly awaiting president. Trump made boosting economic growth — with a shot of adrenaline to come from cutting corporate taxes — a centerpiece of his presidential campaign. He predicted this weekend that growth could jump from the current 3 percent to “4, 5 and maybe even 6 percent ultimately.”

Many economists doubt even a sustained 4 percent rate is achievable. And they’ve mostly thrown cold water on Trump’s prediction the tax changes will put an additional $6,000 a year into the pockets of an average family of four.

SOME CHANGES PROMPT, OTHERS NOT

Once Trump signs, the law takes effect Jan. 1. Employees could start seeing changes in the amount of taxes withheld from their paychecks — hopefully mostly reductions — as early as February.

But taxpayers won’t file their 2018 returns until the following year, too late for taxpayers to have refunds in hand, or checks paid to the IRS, under the new law before they vote in the midterm elections next year.

For corporations, the tax cuts take effect in January, allowing immediate write-off of capital investments.